Notes on Redfin, technology, real estate and life at a startup.

Downtown Down the Drain?

I used to own a loft in San Francisco, a great little 600-square-foot studio with brick walls and hardwood floors in a neighborhood that housed both my favorite burrito joint (which was a bit rough, as this video shows), and sushi restaurant. Really, what more can you ask for? But I got lucky—I sold it before the giant glut of poorly-constructed pseudo-lofts turned the South of Market and Mission areas into dumping grounds for the dotcom generation. When that bubble burst, even the best of the lofts crashed in value.

It reminds me a lot of the situation in downtown L.A. right now. A few lofts are cool, part of a Renaissance. A few more make the area feel hot. But thousands of units in a marginal locale, and you’ve got problems. There just aren’t enough people who find it charming to wade through prostitutes and junkies to get a morning cup of coffee. The L.A. Times covered the issue last week and had this to say about it:

Prices of condominiums, which dominate the downtown market, have fallen more sharply here than in Los Angeles and Orange counties overall, according to DataQuick Information Systems…The median sales price for homes sold downtown, almost all of which are condos, fell to $497,360 for the fourth quarter of last year, 16% below the peak reached in early 2007, according to DataQuick…By comparison, condo prices fell 7% from their peak in Los Angeles County during the same period and 11% from their peak in Orange County, DataQuick said. The median sales price for condos in both counties in the fourth quarter of 2007 was $410,000.

And prices are dropping—I see listings cutting the asking price every day, not to mention short sales galore. Some developers are even halting construction on new spots, according to angelenic.com.

Here are a couple of listings that caught my eye:

This one, deep in downtown at Santa Fe and 3rd, isn’t one of the pretty re-dos, but its got almost 1,800 square feet and it’s bank owned. It was listed last November for $695,000 and is now down to $589,000. It was purchased in April 2006 for $672,630.

Over at Grand and 8th at the Sky lofts, which are 11 stories of residential lofts on top of 10 stories of office space, there is this 2/2 that has dropped from $829,000 to $759,000.

And here’s a short-sale in the Higgins building for $310,00, down from $375,00. But this short-sale in the Bartlett building for a mere $279,00 seems like an even better deal. And last but not least, this 1/1 short sale on 6th Street is already lender approved, and has an asking price of $339,000, with that new mantra of local real estate, “Bring All Offers!”

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